Nov 19, 2012

Qantas plotters may get the numbers to force change

The detailed insight into an alternative survival strategy for Qantas in a

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

The detailed insight into an alternative survival strategy for Qantas in a report in the Australian Financial Review appears to have powerful friends among pilots and shareholders, but can a revolt against the failing strategies of the current management come fast enough to save the carrier?

No-one knows the answer to this question, not even the plotters said to include former CFO Peter Gregg, and vulture, er, venture capitalist Mark Carnegie.

But let’s consider the reasons for urgency.

The Joyce strategy of stopping investment in Qantas international until it achieves whatever the current board sees as an acceptable return on investment is like stopping in the fast lane on a freeway to change a tire.

The rest of the sector isn’t going to wait for Joyce, who has been a total failure at Qantas, and who has brought ruin on the share price, the carrier’s reputation and its relationship with its most valuable asset, its people, to get it right.

Joyce calling time out on Qantas long haul in terms of new investments is making a call no one else, including proposed strategic partner, Emirates, is going to hear or heed.

Adding a fare and capacity war to domestic Qantas activities is scarcely the stuff of genius either. The market needs to know how Jetstar in its own right is faring, and why there appears to be a problem with yields and scheduling with Qantas mainline.

It isn’t a legitimate investment to shuffle around A330s and refurbish aged fuel guzzling high maintenance 767s in the full service supposedly premium product when brand new Dreamliner 787-8s are consigned to a Jetstar international wide body operation that lacks total transparency in reporting and has been reducing some of its scheduling.

And cutting off access to real Qantas flights all the way to Europe and the UK for travellers boarding in Perth, Adelaide and Brisbane in favour of urging them to join the other ex Qantas customers who have already switched loyalties to Emirates brings no obvious benefit to Qantas shareholders.

The current board seems fearful of being in the business of long haul flight, and complicit in actions that are now seriously undermining Qantas domestic.

Neither the board nor the CEO have served Qantas with distinction. How much longer can this self harm persist?

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15 thoughts on “Qantas plotters may get the numbers to force change

  1. patrick kilby

    Ben I think the vultures are circling not becuase QF is badly run and doomed, but that it is grossly undervalued and with the changes in train, especially with Emirates, will be soon worth a bob. Sell of the valuable bits (FF and part of JQ) and wait for the rest to come good is a treat too good to be true. I suspect like the last one it won’t come off though.

  2. xhilde

    Ben what was the origin of the Cathay pacific/qantas conflict? Was it the former QF intra Asia services, Cathay expansion in Australia or something else? It seems to be a remarkable missed opportunity for both parties (though I suspect this group’s interest in a partnership won’t go far- the nz/Cx partnership may be a harbinger of things to come)

  3. Ben Sandilands

    There has been fierce rivalry between QF and CX for as long as I can recall, which goes back to the latter’s umbrage when Qantas put 707s on the Hong Kong route, against Cathay Pacific’s Lockheed Electras. CX didn’t have suitable jet equipment at the time, so the Qantas initiative was a major set back for the Hong Kong carrier’s Australia ambitions.

    Once both were in oneworld it was like two roosters in one hen house. More recently Cathay Pacific took the view that Qantas was promoting the interests of the HNA Group over their interests including being well disposed to Hainan joining oneworld.

    However Hainan and its Hong Kong part owned ventures proved to be strategically inept and ceased to be considered threats by CX, about the time its attentions switched to being deeply concerned about the Jetstar Hong Kong project which I think has sent the relationship between CX and QF to new lows.

  4. David Conley

    Well another biased report from Ben Sandilands. Who would have thought?

    1. Stopping investment in Qantas International until it returns a profit is a sound commercial and business decision. If something isn’t making money why invest in it? Alan Joyce has had the guts to make a call that previous Qantas management haven’t and he deserves credit for stopping a rot that James Strong and Geoff Dixon couldn’t or wouldn’t. We don’t yet know the full picture of the re-structure but everyone, except for you apparently, has been complimentary of a long overdue alliance with EK. With that pieces of the puzzle fall together and we can see the strategy picture emerge. Well those with eyes to see can anyway.

    2. Alan Joyce has been a total failure at Qantas? I’d like to see you justify that comment with even a shred of non-imflammatory, workmanlike journalism.

    3. Brought ruin on the share price? That depends on when you bought in surely! It also reflects a difficult industry with high capital costs and the inherent uncertainty that Joyce faced post financial crisis where he inherited a tired old fleet that has required billions of dollars of investment. (That’s right all of those new 737-800’s, A330’s and Dash 8-400’s don’t come cheap!)If you want to know why the share price has tanked give Margaret Jackson and Geoff Dixon a call because their lack of strategic thought is the cause.

    4. Adding a fare and capacity war? Have you failed to read the fact that Virgin has put A330’s on transcon routes? Or about Tigers increase in flight frequencies? You don’t think these are contributing factors to a glut of domestic capacity as well? No, of course you don’t. It’s clearly Alan Joyce’s fault because he’s “a total failure”.

    5. Shuffling around the fleet and lack of transparency. Do you ask these same questions of Virgin and of Tiger? Do you expect Qantas to give away the extent, or lack thereof, that Jetstar is, or is not, subsidised by mainline to competitors who would be more than happy to use this information to their own advantage?

    6. Cutting off access to Perth, Adelaide and Brisbane? I thought the Emirates deal was about giving them greater access, greater choice and ease of connections in Dubai rather than going all the way to Heathrow? This puts Qantas in a MORE competitive position in these markets, not a less competitive position.

    7. Neither the Board nor CEO have served Qantas with distinction? They serve with the same distinction that your inept, biased mis-representations serve this blog and this website.

    Time to retire to the cranky couch Ben.

  5. ltfisher

    Re para 6 above: how on earth can a withdrawl by Qantas from Perth, Adelaide and Brisbane put Qantas “in a more competitive position in these markets”?

  6. sandman

    David Conley what a great puppet for Allan Joyce you are! I do admire you for spending so much time to write that rubbish however.

  7. Allan Moyes

    A poster on airliners.net boasted he would set Ben right or wtte. I think it must have been Mr Conley. The comments at that website are vitriolic against Ben’s views on QF. If would appear he has few friends there.

    I must admit I think it is a great website for airline pictures but a lot of the comments on many topics veer way off the mark and they love speculating for hundreds of postings whenever there is an unfortunate accident. The Air France accident in the South Atlantic comes to mind. I think it went into seven or more section because there were so many comments, mostly speculative and going round in circles. Certainly long, long before the official fundings.

    I happen to think Ben is quite right on his views on QF. Ltfisher put it succinctly in his post. I can’t see how the tie up with Emirates helps me at all in Brisbane. Dubai is a dump in any case and I wouldn’t want to visit there ever again, even as a stopover at 2.00am.

    However, the names mentioned in the “proposed’ plan make me shudder. Venture capitalists indeed – haven’t we been here before?

  8. Ben Sandilands


    Apart from your fact denying response, the mainstream financial press is this morning full of the same sentiment that has been expressed in Plane Talking for a long time.

    The damage to Qantas, and the constant failures to deliver on promises by its management, is intolerable.

    Time to go back to the dreaming couch for you, and the diet of PR bullsh*t which for some reason you appear to enjoy.

  9. David Conley

    @ ltfisher – Emirates, in both Brisbane and Perth, has greater frequencies through to Dubai than Qantas has to Singapore. When you’re talking of a grouping of Virgin/Singapore vs Qantas/Emirates, the frequency is the key. Why compete with a single daily 744 flight from BNE to SIN when you can have multiple EK flights to DXB, some via Asia, in compliment to this?

    @ Sandman – thankyou for taking the time to comment.

    @ Allan Moyes – I don’t see a poster on airliners.net promising to put Ben right. Whenever I read on there I do see alot of different opinions expressed. And if you think Dubai is a dump, then that’s the beauty of competition. You can pick SQ, if you like SIN, who has just as many frequnecues out of BNE to SIN as EK does to DXB if you’re going to Europe, Africa or the Middle East.

    @ Ben – my “fact denying”? What is clear is that you don’t bother to read any facts but rather just express your “opinions”. The “mainstream” media is a bit excited about a possible takeover in the same way they were excited about Billabong or Arrium or Graincorp. Most of the detailed analysis written by credible brokers and analysts of the QK/EK deal appreciate and support the direction Alan Joyce is going in. Some “mainstream” media also pointed out that EK were codesharing with QF when they were still a minnow and had Geoff Dixon had the foresite to tie up then, when QF still had BKK-LHR and BKK-FCO on their own metal, we would be seeing a totally different QF beast today. And the fact that you choose to swear, along with your failure of analysis, merely adds weight to my point about the general lack of workmanlike journalism which pervades most of your posts.

  10. Ben Sandilands


    You may be new to the blog. In the past I have made, and in some detail, preciously the points you now introduce about the earlier code share with EK, which I have several times argued would have been in a less blinkered Qantas an excellent time to have developed a strong partnership with a view to better connections to a whole range of cities that the Qantas leadership couldn’t find even looking at an atlas in a telephone booth.

    And, as no doubt some long suffering Airbus followers will attest, I also argued that this was the time when an investment in a modest fleet of 777-200ERs would have allowed Qantas as the then larger entity to form a much more advantageous partnership and mentoring role with an Emirates which was a fraction of its current size. By now those 777s would be being augmented or upscaled by 777-300ERs, and no doubt more A380s, and Qantas would have twice the market share it has today, and saved an enormous amount of money on maintenance and fuel costs by adopting the best available efficient technology deployable from 1999, well before the ER became a reality.

    You even sound like you are quoting from one of my earlier posts. My insights into Qantas, and into what it said to parliamentarians about the wickedness of Emirates late in May, before the deal that appeared to be in tatters was revived, are very, very good insights. You comments about Joyce having ‘direction’ are amusing. But not to shareholders who believed in Red Q, or the death threats that didn’t exist, or a promise that according to the plan for recovery Joyce advanced in 2011, would be delivering material bankable benefits in the first half of FY 13, which is now. Where are the benefits, where is the direction, and how do we, they, get out of this cycle of failure. I know it sounds cruel, but I keep notes, press releases and video records of what people, and not just Joyce say, apparently in the expectation that we will all have amnesia and never hold them to their word.

  11. geoff english

    What is that you’re smoking?
    I want some!

  12. patrick kilby

    Ben to be fair, you didn’t like Dallas but this has been a success and paves the way for A380s and 787s in then next few yrs. You don’t like single aisle Asian flights a la Red Q, but Silk Air who does exactly that is very profitable and expanding and in dire need of competition, which was blocked by SQ and the Sing govt not by Joyce. You dumped on lie flat beds in single aisle aircraft but AA is using them in the US. History has shown the A330 to be a better buy that the 777-200 so the 10 A333s not such a bad deal. So the story is more nuanced and not as one sided as you suggest

  13. Allan Moyes

    David Conley

    Thanks for taking the time to respond. The post I was referring to on airliners.net was:

    [Quoting mariner (Reply 3):
    LOL – one of the great blowhards that blights the Australian aviation journalism.

    I couldn’t resist so posted on there. He really irritates me!]

    I apologise if this was not you, ie you are NOT sydscott, but there had been no critical comment on this blog before your posting.

    Ben has written extensively and more professionally about all facets of the aviation industry than any of the current mainstream journalists, who seem more excited by a possible coup against the PM or some wonderful stunt by Abbott. The airline industry hardly rates a mention, unless it is a fawning piece in the travel pages where the writer has usually flown “courtesy” of the airline or hotel chain he/she is raving about.

    Sorry, Ben, I realise you are more than capable of fighting your own battles! 🙂

    I appreciate that I can travel a multitude of ways between BNE and LHR or other cities in Europe. My point was the the tie up with Emirates (as a QF codeshare – if that’s what it will be) does not help me as the EK flight leaves at some ungodly hour of the morning. It may be that thousands of Brisbane citizens and those of the surrounding area are happy to do so, but I can’t see it myself.

  14. ltfisher

    Agreed Allan Moyes: who would really prefer a 0230 BNE departure for DXB, 16+ hours away, it there was a choice. Of course by walking away QF leaves the question of departure/arrival times completely to the dictates of whichever airline chooses to serve the route.

  15. Rainer

    I have used the 0230 from BNE to DBX a few times and have found it very convenient when you are connecting to Europe. The last time it was in FRA at 1800 (local) of the same day, so only one day of my holiday was gone. Was much better than anything else.

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